One Thing Liberals and Conservatives Agree On (For Different Reasons)

What do Annie Leonard (liberal) and Dave Ramsey (conservative) have in common?  Let’s take a look:

Annie Leonard, the author of “The Story of Stuff” and web based film maker, talks endlessly about how much stuff we manufacture, buy, use, throw away, and buy again.  The Story of Stuff is a tragedy, telling of our dependency and obsession with stuff.  Stuff that continues to feed a gigantic cycle of consumption, deplete resources, fill trash dumps, burn fuel, and contribute to global warming.  She increases awareness of our carbon footprint, and how it grows with each thing we buy and throw away.  Stuff is the problem.  Buy less stuff.  To her followers, Annie sends a sensible message to a country that is overtly focused on material goods, and not focused enough on the health of the planet.  To her conservative critics, however, she is an anti-establishment leftist liberal. 

Dave Ramsey, the author of “The Total Money Makeover” and financial radio talk show host, advises his followers on how to achieve Financial Peace.  He teaches that we Americans tend to act far too often out of want instead of need.  We see things and we buy them, often with a credit card, or with the last few dollars we could have had in the bank.  Dave helps folks work their way from debt to prosperity by being prudent about the things they buy.  He re-frames our attitude toward the things we think we need, and helps us identify what we really need.  He teaches the value of money, the wisdom of savings, and the blessings of frugality.  Things are the problem.  Don’t buy unnecessary things.  Save your money, invest it, and make it work for you.  Dave is a common sense, tough-love, conservative.   To his followers, his advice is as good as gold.  To his liberal critics, however, he is a Bible thumping money miser. 

Clearly, liberals and conservatives share a similar view toward wasteful, costly, extravagant, unnecessary stuff and things - for very different reasons.  With the development of cable television, the internet, Facebook, and Twitter, we obtain this information faster now than ever before in history, and regardless of our political view, we are getting the same message.  It is this new awareness of how we buy things and waste stuff that may be shaping our current economy.  After the economic bubble burst in 2009, average credit card debt declined by nearly 20%, mostly due to default.  Four years later, credit card debt continues to stay flat or even decline slightly, despite slow growth in the Gross Domestic Product.  Overall employment per capita was at its highest during the 10 years prior to the recession, and now employment also continues to lay flat.  As I suggested in my post “The Great Exuberance” August 2011, it is becoming more apparent that the robust economy in the decade prior to 2009 was the result of excessive consumption – a level of consumption that may no longer be prudent for any of us.

Dollar average is based on homes with credit card debt, which is also in decline.

In fairness, it is important to identify the subtle differences between the liberal and conservative views on consumption.  Annie takes a world view, or at least a nationwide view, implying that nobody should have excessive stuff, not even the wealthy or the resourceful.  Consequently, her message implies that anyone with lots of stuff should be ashamed of it.  Of course, taking stuff from the wealthy is not the center of Annie’s message.  Her goal is more a matter of individual awareness.  Dave, on the other hand, talks about things solely as they compare to the size of your wallet.  No matter how much you make, you must spend less than your income.  So, if you have lots of things and you bought them on credit, you should be ashamed of that.  If you have lots of things and you've paid all of your bills, made charitable donations, and still have money left over, there’s nothing to be ashamed of.  For the average American, however, the size of our wallet isn't much of a variable.   It also doesn't matter if we are liberal or conservative, or if we like Annie’s message or Dave’s message.  Having less stuff and things is apparently a win-win for everyone - but not so great on the overall economy.

Tony F.

2013

Things I Wish Conservatives Would Ask

As a compassionate society, what should we do with the people who are less able than us?  Like those with low I.Q’s, physical problems, poor social skills, disfigurements, and learning disabilities - the kind of people that most companies will not hire or keep - what should we do with them?  Do we really believe they should be able to make a living on their own?  Who will hire them?

As lovers of human life, how can we spend less time condemning young women who are thinking about abortion, and help them embrace the blessings of parenthood?  How will she work and raise her baby at the same time?  Should we assist her with her child?  Can she make enough money to send her child to college?  Who will hire her?  Do we really believe calling her “sinner” will help her love God and feel blessed with her child?  Is this what Jesus would have done?

As a nurturing society, how can we help the children of failed parents?  What should we do for kids whose families don’t support them or guide them?  Who will guide them if we don’t?  Is our condemnation helpful? Is being poor and useless a motivation in itself?  Do we really believe people are okay with living at the bottom?  Do we really believe people choose not to do better?  What can we do with people who give up hope?  How can we teach them differently?  Is it truly their fault? Can they be changed?  Who is teaching them to fish?

Do we really believe slashing entitlements is the best thing we can do for the elderly?  What should we do for the old folks if entitlements are gone?  Do we really believe they will make a living if they suffer enough?  Where will they live?  Who will hire them?

What should we do with people who are unable to work?  Like people with real illnesses and disabilities - what should we do with them?  How will they live?  Should we care?

How is it that America is enjoying a higher standard of living with all this Socialism going on?  Do we really believe social programs are the cause of national debt, joblessness, and social decline?

Did the Bible ever say, “Let suffer the poor, the elderly, the sinners, the sick, the meek, and the dumb.”?  Did the Bible say “Ignore the least of men and they will improve”?  

Did the Bible ever say, “Protect the wealthy, and all will prosper”?  

In the end, what should we believe?

Tony F.  2013

Who are the Deadbeats?

In his bid for the presidency, Mitt Romney said 47% of Americans consider themselves to be entitled to government benefits.  In a recent letter to voters, an Indiana Republican congressman reported that nearly 70% of the Federal budget was spent on entitlements.  Tea Party Republicans constantly push the idea that all of our budget problems are driven by entitlements.  Amazingly, all of these statements may be true, but only if we grossly expand the definition of “entitlements”.

Most voters agree entitlements include Social Security, Medicare, and Medicaid.  These social programs are funded through specific payroll taxes, most are operating on a surplus, and none contribute to the Federal deficit.  In fact, a portion of our federal debt is borrowed from these surplus accounts.  A majority of social programs go to the elderly, while about a third goes to the disabled and working poor.  All together, 91% of social programs go to people who are retired, cannot work, or are unable to earn enough to live.  This accounts for no more than 25% of the U.S. population – far from the 47% suggested by Romney, and the 50 + percent suggested by the Tea Party.

In order for conservative claims to ring true, we must expand the definition of entitlements as described by the Center on Budget and Policy Priorities:

“By "entitlements," CBPP is including Social Security, Medicare, Medicaid, children's health insurance, food stamps, school lunch programs, welfare, unemployment insurance, the Child Tax Credit and the Earned Income Tax Credit.”

When we add unemployment insurance, entitlement population increases by another 4% totaling about 30%.  Entitlement population really spikes when we add Tax Credits, which captures all working families at all levels, and earns most of us the title of "deadbeat".  Then conservative claims ring true, kicking up the entitlement population to over 50%, and increasing Federal budget “expenses” to about 68% by defining Tax Credits as “expenses” and adding trillions to the entitlement figure.

Who, exactly is "them"?

By using big numbers and re-defining entitlements, conservatives create the illusion of a deadbeat society that simply does not exist.  They hint that a large group of Americans choose not to work because liberals have made it too easy.  To quote Mitt Romney, "[M]y job is is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives."  Who are those people?  Let’s look for answers by understanding our population (2012 data):

29.65% of Americans earn middle class wages or better.

17.25% are children under 16 yrs.

4.52% are full time parents.  Less than half of U.S. children have a full time parent.

4.34% are full time students of working age.  Some may work part time.

5.06% are unclassified.  Some have retired early. Others may have varying disabilities. Not on Federal entitlement rolls.

8% are working at or below the poverty line (under $10.00 per hr.).

3.62% are actively seeking work, but still unemployed.

10.66% are retired elderly.

4.80% are severely disabled.  Another 17.5% have varying degrees of disabilities.

4.18% are incarcerated, hospitalized, or institutionalized

As you can see, mostly everyone in America is working, studying, or retired.  Exceptions include full time parents, severely disabled, and institutionalized.  The only able-bodied people who choose not to work are stay at home parents, retired, and perhaps a few of the unemployed or marginally disabled.  The largest of all these is the healthy retired, an able bodied, non working sector that has grown dramatically over the last 100 years.  The second largest is stay at home parents, a sector that has shrunk over the last 50 years as more mothers have joined the work force.  So, who on this list are the deadbeats?

Let’s consider people who need their entitlements the least, such as middle and high earning families who get tax credits.  Eliminating these credits would reduce the number of deadbeat households by nearly half, reduce entitlement expenses by at least 15%, and bring the Federal budget into surplus!  Problem solved!  Of course, this idea would be wildly unpopular with voters, and it would take a bigger bite out of the middle class.  As the Tea Party warns us against entitlement addiction, it turns out we are among the addicts.  Amazingly, our entitlement addiction in the form of Tax Credits adds most directly to the deficit.  So, the most comfortable sectors in America will continue to take entitlements (as defined by conservatives) while we continue to seek an imaginary group of deadbeats to blame it on.

Tony F.

2013

No Negotiation

Last year at this time, President Obama spent several sessions with John Boehner in an attempt to negotiate a raise in the debt ceiling, a raise in taxes, and a measured cut in Federal spending.  Obama referred to this as the “balanced approach”.  The result was a stalemate in which both parties agreed to budget sequestration and automatic cancellation of the Bush-era tax cuts.  The hope for both parties was that they would gain the majority of power in November 2012 and make the necessary corrections afterward.

Throughout the months following this temporary resolution, Republicans repeatedly chastised the President for what they termed “failure to lead”.  Leadership is defined by the U.S. Army as, “Influencing people by providing purpose, direction, and motivation, while operating to accomplish the mission and improving the organization.”  Did the President fail to lead?  This is my assessment:

Influencing people.  Grade A.  Obama is highly influential, and this is the trait that scares Republicans.  He is popular, and knows how to play to the public. 

Providing purpose.  Grade C.  The trouble here is that our government is divided specifically to argue about its purpose.

Providing direction.  Grade A.  The offer of a balanced approach to the budget was a clear and sensible direction.

Providing motivation.  Grade C.  The only motivation in today’s politics is to act in accordance to one’s constituency.

Accomplishing the mission.  Grade C.  The mission of reducing the annual deficit has been clear, but only slightly improved.

Improving the organization.  Grade D.  The deficit and the economy improved slightly, but dysfunction in congress is at a peak.

With a grade average of C+, it is arguable that Obama was barely passing as a leader when he won the 2012 election, which leaves room for improvement.  So, how much improvement did we get?

A year after the last budget crisis, not much.  Instead of coming to the table, Obama simply said “I am not going to negotiate”, consequently maintaining a stand-off.  The hope is that the other party will flinch and the prevailing party will secure a huge political victory.  I am convinced that is not going to happen.  This is not leadership.

Something has to give, and it has to come from the President.  An influential leader would not let another day pass without bringing the opponent to the table.  A purposeful leader would set his terms for negotiation and confidently wait for a reply.  A directional leader would set clear goals for the negotiation and invite the opponent to meet his challenge.  A motivational leader would offer a win-win, the very thing needed to move our country forward and save face.  This would accomplish the mission.  This would improve the organization.  This is leadership.

The Republican party has demonstrated that they are fractured and poorly lead. The Tea Party continues to push for breakdowns of Obama Care while moderates such as John McCain clearly admit it cannot be done.  Boehner gave up the ship last year when he admitted he could not align the party.  Leadership is needed in this country, and it is not likely to come from the right.  The President is the best man for the job.  In fact, this is his job.  Negotiate, Mr. President, negotiate.

Tony F.

2013  

Seven Fractured Myths about "fracking"

Since its inception in December of 1970, the U.S. Environmental Protection Agency has waged war on careless practices in industry and energy to make our nation a cleaner place.  But, despite the EPA’s effort to clean up the way America does business, it seems that they have left hydraulic fracturing alone.  Why? 

Myth #1 – the EPA is allowing the process to go on untouched.  Incorrect.  The EPA has established very strict rules to mitigate the potential for environmental impact of gas exploration.  It is because of these strict rules that fracturing is allowed to continue.

Myth #2 - Hydraulic fracturing forces toxic chemicals into the ground, and contaminates our water.  After extensive study, the EPA has been unable to connect any water contamination to the fracturing process unless there was an error in the process.  How do they know?  Because the alleged contamination found in wells bares no similarity to the ingredients used in fracturing fluids, and the impurities in well water are found to be naturally occurring.

Myth #3 – Hydraulic fracturing forces methane up through the ground where it enters wells and bubbles to the surface.   Evidence indicates these gassy wells had existed all along.  The EPA has found no evidence of methane leakage due to fracturing, unless the process was done incorrectly. Seventeen years ago I lived on a property with well water from the Fox Hills aquifer, approximately 900 feet deep.  This water contained salt, sediment, sulfur, and it bubbled with methane.  All of these ingredients occurred naturally. 

Myth #4 – There is no way to prevent the migration of frac fluids into the natural water system.  Actually there is.  Our water sources lie in the upper crust of the earth, 100 to 1000 feet below the surface.  Oil and gas resources are found 3,000 to 8,000 feet below the surface, so there is at least 2000 ft. of stone separating the two.  Throughout the drilling process, a high pressure casing is installed in the entire length of the shaft.  Due to this extensive casing, the EPA has pronounced the process safe when done properly.  There have been a few cases of water contamination due to surface spillage or improper disposal of frac fluids.  The EPA continues to regulate and penalize these matters.

Myth #5 – Fracturing fluid is full of dangerous and toxic chemicals.  In the aftermath of the recent floods in Colorado, allegations of spilled fracturing fluids were left essentially untouched by the EPA and the media because fracturing fluid is not very dangerous.  It is composed of 90% clean water, 9.5% sand, and less than half a percent of additives which the USDepartment of Energy characterizes as those found in a typical household.  Additionally, energy companies continue to reduce the level of toxic ingredients.  Governor John Hickenlooper recently claimed to have drunk from a glass of frac fluid which was passed among a group of Halliburton executives.

Myth #6 – The ingredients in fracturing fluid are a well-kept industry secret.  Not at all.  Contrary to this accusation, the ingredients in these fluids are not kept secret.  You can find the details at www.fracfocus.org.

Myth #7 – Hydraulic fracturing depletes water resources.  It takes several hundred thousand gallons to fracture a single well, but this quantity is not very large compared to the water we use every year.  The average American home uses 350,000 gallons of potable water per year.  The average acre of irrigated farmland uses 500,000 gallons per year.  When put into perspective, the implementation of hundreds of new wells each year collectively equals the annual water usage of a single neighborhood or a single farm.  Energy companies are also working hard to reuse and recycle their extracted water.  With new filtering processes, the industry has successfully reused 15 to 20 percent of fracturing water, and this amount continues to rise.

With the prompting of HBO producer Josh Fox, “anti-fracking” activism has reached fever pitch, contradicting the opinions of both the EPA and the Obama administration.  Unfortunately for Mr. Fox, his allegations continue to be proven wrong.  If we are to believe that the EPA is turning a blind eye to hydraulic fracturing, we must first believe that they have been controlled by the energy sector, or are somehow subdued by the Obama administration.  These two accusations are extremely hard to believe, especially in tandem.  There is no doubt that hydraulic fracturing is potentially dangerous if left unregulated, but the EPA and the state are actively involved, and the energy sector is cooperating.  As it stands, the EPA continues to observe and study the matter.

Tony F.

2013

The 70 Year Average

In the years from 1942 to 2012, the U. S. has enjoyed a 70-year heyday.  After our build up for WWII, we became the undisputed leader of the world in all military, economic, and influential fronts.  It seems fair to assume that we have been doing things fairly well over the last 70 years, and any idea to the contrary would be nothing short of experimental.  So, instead of engaging in endless debate about what is healthy for our economy, why don’t we compare our current numbers to the 70 year average?  

The big congressional debate is, once again, the debt ceiling.  The National Debt is currently 103% of GDP, which is quite high compared to the 70 year average (70 YA) of only 62%, but not higher than after the war.  Debt reduction is needed, but how?  Conservatives say we need to cut costs, which is correct.   Federal expenses are currently 22.8% of GDP, which is nearly 2% over the 70 YA.  On the other hand, Liberals say we should increase taxes, which is also correct.  Current Federal tax incomes are only 15.8% of GDP, nearly 2% below the 70 YA.  The top tax rate of 35% is nearly half the 70 YA.  So, the reason our debt has grown at record rates is because congress is not raising taxes, or cutting costs, and both are sorely needed.

One thing that becomes apparent when we consider the 70 YA of taxes and expenses is that, contrary to conservative opinion, the size of government has not grown out of control.  It is only 2% of GDP larger than the 70 YA, and well within the highs and lows of the last 70 years.  It is the combination of expense overruns and low taxation that creates our swelling deficits.  We often hear about the need for a balanced budget, which is also an overstatement.  Spending has outpaced income for all of the last 70 years, with just a few exceptions, Clinton's administration being the last.  The average annual deficit has averaged about 3.3% of GDP, just slightly below the 70 YA rate of inflation at 3.9%.

What about unemployment?  This figure is still quite high, and unemployment is a huge problem in America, right?  To the contrary, this appears to be false, because overall employment per capita (workforce) is at a comfortable 49.2%, a full 3.78% above the 70 YA.  That is to say, more Americans are at work today than most of the 70 YA, and more than any time prior to 1988.  Unemployment is a measure of change in employment.  In this case, we are comparing to the absolute highest overall decade of employment in U. S. history (1996-2006).  So, contrary to Tea Party rhetoric, America is not living off the government, and we do not need to be starved in order to go to work.  We are not under employed.  We just happen to be below maximum employment.

So, if more of us are working, why don’t we feel more successful?  We should, because our average household income of $68,000 is far better than the 70 YA of only $52,800 (adjusted to 2012 dollars).  Perhaps that is why Barack Obama had the gall to say, “The middle class is doing fine.”  On average, we make about 28% more than our parents did.    

So, let’s review:  We make more money than our parents did, and more of us have jobs than our parent’s generation.  We are taxed less than our parents, and the government spends slightly more on programs than it did for our parents.  Maybe it is time for us to think hard about the real debt problem - modern greed.  Tell your congressman to raise taxes, and find sensible ways to cut the budget without taking benefits from the poor.  This is the “balanced approach” Obama spoke of last year.  The trouble with congress at this moment is that it doesn't want to do the right thing.  They certainly don't want everyone to know the President was right all along.

(Special thanks to my son, Marcel Fiore, for creating the dashboard gauges.)

Tony F.

2013

The Most Ridiculous Bill Yet

Last week the Senate approved an immigration reform bill that was announced with upbeat fanfare by the media.  Liberal anchors called it a great compromise on the path to citizenship, and conservative anchors called it a much needed border security measure.  Everyone was pleased, except people like me.  I could only describe this bill with one word – ridiculous.

Immigration reform has been promised by Democrats for many years, in the form initially referred to as the Dream Act.  The whole idea is that we should allow the best immigrants – those who work hard, study, graduate school, produce, and assimilate themselves into society - the right to American citizenship.  It makes America stronger, healthier, and more productive.  I wrote about this idea in February.  For the longest time, conservatives would not engage this conversation.  They said a path to citizenship would only encourage more illegals to come running across the border, referring to them in the manner of sub-human pests.  It wasn’t till the election of 2012 that conservatives realized that they were being beaten by and needed to earn more of the Hispanic vote.  Republicans would not dream of immigration reform until they realized they needed do something to earn the favor of minority voters.  So the conversation was begun.

The result is a cobbled mess of legislation that doesn’t reform immigration at all.  Instead, it has turned into a military spending bill.  With the effort of Republicans, so-called immigration reform has been placed on hold until we spend $38 to $58 Billion on increased border security.  Reform kicks in after the money is spent and someone magically announces that the job of border security is complete, although the point of completeness is not defined.  Furthermore, the bill does not define where the billions are supposed to come from.  Didn’t we just fight our way through budget sequestration to save approximately $50 Billion, supposedly shrinking government and staving off certain bankruptcy?  Wasn’t reduction in government spending the absolute most important agenda on the right side of the aisle?  Wait, aren’t those the same guys who decided to spend billions of new funds on border security?  As it turns out, there is another agenda that is stronger than winning minority votes, and it is winning the favor of defense contractors.  Clearly this bill has taken a turn toward big business while ignoring the Hispanic vote that Republicans so badly need.  It’s ridiculous.

For conservatives there is still a bright side.  We don’t need to spend that money at all.  In fact, when the next debt ceiling debate comes to a head, conservatives can use it as leverage to completely kill the Immigration Reform Bill and save us Billions again!  So, for those voters who have absolutely no long term memory, it will appear that the conservatives did just the right thing at the right time by killing expenditures that were brought up by conservatives in the first place.  It’s just brilliant.  In fact, the House has already promised to disassemble the entire bill and throw it out piece by piece.  Do you suspect that they intend to come up with something better?  I certainly don’t.  They most likely will come up with something even more ridiculous. 

So let’s all give a hearty hip, hip, hooray for the bill that does absolutely nothing to improve immigration or the path to citizenship, while first requiring that it cost tens of billions, if the money is ever appropriated, which it most likely will not be.  I guess the most baffling question for me is how the media, who is usually so deliciously inquisitive about these things, bought into this joke of a package.  Do they get a piece of the billions too? Ridiculous.

Tony F.   2013